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Regulators Fine Citigroup $770M Over Credit Card Add-On Products

posted Jul 22, 2015, 12:14 PM by Resty Manapat

WASHINGTON — Citigroup is
facing $770 million in charges after two federal regulators said the megabank
engaged in deceptive marketing and unfair billing practices related to its
credit card add-on products.

The
Consumer Financial Protection Bureau and the Office of the Comptroller of the
Currency filed separate orders Tuesday against Citibank related to add on
products like debt protection and credit monitoring, which were partly
administered by vendors. Regulators also alleged that a Citi subsidiary charged
deceptive fees for collecting payments on certain delinquent credit card
accounts.

The
CFPB ordered Citibank and the subsidiary to pay $700 million in restitution to
nearly 9 million affected consumers as well as a $35 million civil money
penalty. The OCC separately required Citibank and the affiliate to pay a $35
million money penalty. Citibank has agreed to the stipulations in both orders
without admitting or denying wrongdoing.

"We
continue to uncover illegal credit card add-on practices that are costing
unknowing consumers millions of dollars," said CFPB Director Richard
Cordray in a press release. "In our four years, this is the tenth action
we've taken against companies in this space for deceiving consumers. We will
remain on the lookout for similar conduct and will address it as we find
it."

In
a company issued statement, Citi said it has already begun remediation to
consumers and no longer offers the products cited by regulators.

"Citi
cooperated fully with the CFPB and OCC and has taken extensive steps to address
each issue that affected customers. Citi previously discontinued sales of the
products included in the agreements, which include credit monitoring and debt
protection products and wallet protection services, and no longer charges
expedited pay-by-phone fees," the company said. "Customer remediation
has been underway since 2013, and Citi will continue to notify and refund
affected customers. Affected customers will automatically receive a statement
credit or check and those no longer with Citi who are eligible will be mailed a
check."

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